Friday, October 28, 2016

GBP/AUD Is Forming an Inverse Head and Shoulders Pattern

After the big drop of the GBP back on 7th October 2016, when the GBP fell drastically compared to all other currencies, we finally see attempts to begin returning to its old levels.

On the GBP/AUD daily time frame we can see a morning star bar which could be the first signal for an impending move to the upside. Also the RSI indicator is forming a divergence between the last two lows from 19th October and 26th October.

 On the four-hour time frame we can see a classic inverse head and shoulders pattern.

For me these signals are enough to expect a new move to the upside. If the inverse head and shoulders pattern reaches its limit then after a breakout above the neckline we can expect the pair to rise with about 300 pips.